Health care reform: Understanding the details of the 'individual mandate'

New York TimesThe U.S. Supreme Court is expected to eventually hear a challenge to the constitutionality of the health care reform law.

One of the big health care reform battles is over a single provision in the 1,000-page law: that we must buy health insurance. And if we don't, we pay a fine.

It's angered a lot of people.

Congress, some say, doesn't have the right to force us to buy anything. If it does, it's infringing on our individual rights.

Like all arguments, this one has another side.

Those in favor of health care reform say the requirement to buy insurance will keep costs down for all of us. Without it, they say, only sick people will buy insurance. And we need healthy people paying into the system so costs are spread out among more of us.

They also say that if you go without insurance and then get sick, the rest of us have to pick up your tab either through taxes or higher medical costs.

The argument over what's called "the individual mandate" or "individual responsibility" is the key point in the lawsuits that states have filed to try to repeal the law -- or at least parts of it.

Twenty-eight states, including Ohio, have asked the courts to put an end to some or all of the health care reform law.

Doesn't matter which side you're on, you need the facts to argue your point.

I've spent hours going over the sections of the law that cover the mandate, asking lawyers and other experts to help me understand the often convoluted details as I continue to explain health care reform.

Some religious groups don't have to buy insurance either. Those that have historically been exempt from the Social Security System, such as the Old Order Amish, are one example. But religious groups whose members pay for one another's health care instead of buying insurance are also exempt.

Of course, that means the law still requires a lot of people to have insurance.

But many won't have to pay full price.

And it's not just the poor who get a break.

The law says those who earn up to 400 percent of the federal poverty level will get help paying for their health insurance, unless it's provided by their employer.

What's 400 percent of the federal poverty level?

For a single person, it's an annual salary of $43,560.

For a couple, it's $58,840.

For a family of four, $89,400.

The help will come in three ways.

Before I explain, let me say one thing: Anyone who earns less than 138 percent of the federal poverty level will be eligible for Medicaid beginning in 2014. That means they can be covered by that government insurance program.

So what's 138 percent of the poverty level? Right now, it's $15,028 a year for a single person; $20,300 for a couple and $30,843 for a family of four. But those numbers will likely be higher by the time this provision goes into effect.

Now, back to the three kinds of help the law offers to offset the cost of care.

The first is a reduction in insurance premiums. That reduction is based on income, and it's available to those who earn less than 400 percent of the poverty level. Those who earn between 300 percent and 400 percent of the poverty level will pay no more than 9.5 percent of their income, for example. While those who earn 200 percent of the poverty level will pay no more than 6.3 percent.

The second type of help -- lower co-pays -- will go to those who earn less than 250 percent of the federal poverty level. That's $27,225 for a single person; $36,775 for a couple; and $55,875 for a family of four.

The third type of help will be for annual out-of-pocket maximums.

Simply put, those will be lower for people who make less money.

How much lower depends on income.

And, yes, there are fines for those who don't have employer- or government-provided insurance and refuse to buy their own.

The fines begin in 2014 and will be due with income taxes the following April.

In general, they work like this:

In 2014, the penalty is either $95 for every adult and $47.50 for every child under the age of 18 in the household or 1 percent of taxable income for the household, whichever is larger.

In 2015, it's $325 for every adult and $162.50 for every child or 2 percent of taxable income, whichever is larger.

And in 2016, it's $695 for every adult and $347.50 for every child or 2.5 percent of income, whichever is higher.

After 2016, the penalty increases annually by the cost-of-living adjustment.

But there will be no penalty for those who can't afford insurance.

They're defined as those who don't make enough to file federal taxes or whose insurance premiums will cost more than 8 percent of their household income.

These aren't all the details on the individual mandates. I've had to summarize many of them for the sake of space. And the finer points of the health care reform law -- the regulations -- are being worked out now and have not yet been released.

But this is the gist of it.

My hope is that you now have the basics you need to understand one of the biggest debates in health care reform. And from here, you can decide which side of the issue you're on -- and why.

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